UPDATE 1-Turkey's Jan gold imports plunge due to higher price ...

>

By Behiye Taner

ISTANBUL Feb 6 (Reuters) - A sharp fall in the Turkish lira and rising world gold prices curbed Turkey's demand for gold in January, slashing monthly bullion imports by more than 80 percent, data from the Istanbul Gold Exchange showed on Thursday.

Turkey imported only 6 tonnes of gold bullion in January, a 47 percent drop compared with the same month last year and an 81 percent plunge from December's 31.65 tonnes, according to the data from the exchange, part of Bourse Istanbul.

"Lira depreciation has made gold more expensive. The Fed's steps have caused world gold prices to rise. These have all negatively effected the gold demand," said Mehmet Ali Yildirimturk, the head of Istanbul's Chamber of Jewellers.

Investors sold off emerging market assets in expectation that the U.S. Federal Reserve will continue gradually to reduce its stimulus programme.

The lira was among the biggest losers, particularly vulnerable because of Turkey's large current account deficit and political uncertainty surrounding a corruption scandal which has developed into one of the biggest challenges of Prime Minister Tayyip Erdogan's 11-year-rule.

The lira has dropped around 5 percent since the start of the year, while world gold prices have gained around 4 percent, following a 28 percent drop in 2013.

Concerns about the fragility of stock markets after a heavy selloff in recent months have also piqued investor interest in gold.

Yildirimturk expected Turkey's demand to remain subdued in the first quarter, particularly after a sharp interest rate increase by the central bank last month to shore up the currency.

Gold is a traditional investment for many Turkish people seeking to hedge against sharp fluctuations in their currency and Turkey is one of the top five consumers of the metal.

Jewellery, such as women's gold bangles gifted at weddings, is seen by many as a safe store of wealth.

Turkey's gold trade with Iran boomed in 2012 when Ankara was paying for its natural gas and oil imports with Turkish lira, and Iranians were using those deposits, held in Turkey's Halkbank, to buy gold.

Iran's demand was instrumental in driving Turkey's bullion imports to record high above 300 tonnes last year. Traders say demand from Iran has eased over recent months.

(Reporting by Behiye Selin Taner; Writing by Humeyra Pamuk; Editing by Daren Butler and Anthony Barker)

FILED UNDER: Basic Materials

• Tweet this
• Link this
• Share this
• Digg this
• Email
• Print
• Reprints